Passive Income

What is Passive Income

What is the common issue in 9-to-5 jobs, consulting, selling things on eBay or being a Uber driver? Well, no matter full-time or part-time, you only make money when you are working. Once you stop, or at rest, the income stops. So basically you are trading time for money.

Passive income is the opposite. The idea is to create income streams that work for you. Whether you are on vacation, having a family emergency, or sleeping at night, the streams never stop.

But that does not come free. It requires some really hard-work upfront,and it may take months if not years before you see any meaningful income. If you would like to give it a try, here are some ideas.

Passive Income Ideas

Index Fund

Vanguard pioneered index funds, which are not actively managed by fund manager, but are programmed to mimic some index, like S&P 500. They are low in costs and requires no maintenance.

Read more: Index Fund

Bank Interest(Saving Account, CD, Money Market)

Usually the interest rate is less than 1%, which makes it not very attractive. However the risk of losing money is also very low.

High Dividend Stocks

3%-4% dividend is considered “high”. Too high a dividend could be risky. A more important aspect than the current dividend is how long has it been raising dividend in the past.

Online Automated Investment Service

Some websites provide the service to manage your portfolio. Yes they take a cut, but you are hands free, and there’s no need to understand all those options outthere.

• WealthFront
• Betterment

Invest in Real Estate

There are actually several ways to invest in real estate:

• Manage by Yourself, be the landlord. You need to take care of everything, and you get all the money.
• Delegate to a property management company. Of course they will take a cut.
• Rent out On AirBnB or HomeAway
• Invest in real estate investment trusts (REITs)

Become a business silent partner

This is not an option for everyone. Business may lose money. Make sure you invest your money to someone or something you know about.

Royalties

From intellectual property such as music, scripts, patents.